The Evolution of Comparative Advantage: Measurement and Welfare Implications / Andrei A. Levchenko, Jing Zhang.

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Levchenko, Andrei A

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TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w16806.Publication details: Cambridge, Mass. National Bureau of Economic Research 2011.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We estimate productivities at the sector level for 72 countries and 5 decades, and examine how they evolve over time in both developed and developing countries. In both country groups, comparative advantage has become weaker: productivity grew systematically faster in sectors that were initially at greater comparative disadvantage. These changes have had a significant impact on trade volumes and patterns, and a non-negligible welfare impact. In the counterfactual scenario in which each country's comparative advantage remained the same as in the 1960s, and technology in all sectors grew at the same country-specific average rate, trade volumes would be higher, cross-country export patterns more dissimilar, and intra-industry trade lower than in the data. In this counterfactual scenario, welfare is also 1.6% higher for the median country compared to the baseline. The welfare impact varies greatly across countries, ranging from -1.1% to +4.3% among OECD countries, and from -4.6% to +41.9% among non-OECD countries.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w16806 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w16803 The Impact of Early Occupational Choice On Health Behaviors /	nber w16804 Cream Skimming in Financial Markets /	nber w16805 Capital Controls: Myth and Reality - A Portfolio Balance Approach /	nber w16806 The Evolution of Comparative Advantage: Measurement and Welfare Implications /	nber w16807 Has Consumption Inequality Mirrored Income Inequality? /	nber w16808 Market Timing, Investment, and Risk Management /	nber w16809 Industrial Catching Up in the Poor Periphery 1870-1975 /	Next

February 2011.

We estimate productivities at the sector level for 72 countries and 5 decades, and examine how they evolve over time in both developed and developing countries. In both country groups, comparative advantage has become weaker: productivity grew systematically faster in sectors that were initially at greater comparative disadvantage. These changes have had a significant impact on trade volumes and patterns, and a non-negligible welfare impact. In the counterfactual scenario in which each country's comparative advantage remained the same as in the 1960s, and technology in all sectors grew at the same country-specific average rate, trade volumes would be higher, cross-country export patterns more dissimilar, and intra-industry trade lower than in the data. In this counterfactual scenario, welfare is also 1.6% higher for the median country compared to the baseline. The welfare impact varies greatly across countries, ranging from -1.1% to +4.3% among OECD countries, and from -4.6% to +41.9% among non-OECD countries.